Freshman Finance 101

Here's how to handle the unexpected expenses when your kid heads off to college.

By Jane Bennett Clark, Senior Associate Editor, Kiplinger's Personal Finance

August 20, 2008

You thought you were finished with the college bills when you figured out how to pay the tuition. But you hadn't reckoned on buying the microwave, the mini-refrigerator and, of course, those extra-long sheets.

Once your kids head off to school, you may face other financial emergencies. What if they get sick, lose the laptop or overdraw their checking account? Here's how to handle those situations with a minimum of pain to your pocketbook, and your child's.

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Medical expenses. One way or another, your child will probably be covered if he or she needs medical attention at school. Many colleges require that you either show proof that you have health insurance or take out a policy through the school, at a cost of about $300 to $400 per semester.

If you have the choice, keep your child on your group policy, advises Mike McCartin, an independent insurance agent in College Park, Md. Policies you purchase through the school often max out at $50,000 or $100,000 of coverage, compared with the $1 million or more offered on employer policies, and carry relatively low limits on other benefits, such as inpatient care.

Don't rely on your own insurance, however, until you make sure it covers your student beyond the age of 18. Lately, some companies under financial stress have been trimming benefits, including coverage for full-time students over 19, according to Bob Wirag, director of health services at the University of Central Florida.

Also see that your plan offers a provider network near campus. If not, you'll have to choose between a school policy and independent coverage. To compare prices and benefits, find a broker through the National Association of Health Underwriters or go to eHealthInsurance.com.

Damaged or lost laptops and other stuff. If your child's computer is lifted from the bio lab (or wounded when your kid jumps off the loft bed and lands on top of it-hey, it could happen), your homeowners policy should cover the loss or damage as long your student lives in a dorm. Call your agent to review the specifics of your policy.

You can also buy separate coverage for a specific item, such as a laptop or cell phone, if you want to reserve your homeowners insurance for major claims or cover property whose value falls below the deductible. Safeware, at safeware.com, offers $1,000 worth of coverage on a laptop, with no deductible, for about $70 a year.

Homeowners insurance doesn't apply if your student moves off campus. In that case, you can pick up a renters policy for about $200 a year.

Over-the-top texting. Ask teenagers to limit their text messages and you might as well expect them to stop breathing. So it makes sense to go with a cell-phone plan that includes unlimited texting, such as Verizon's Wireless Select, which starts at $60 a month for an individual and $100 for the family plan. As for voice minutes, a conservative number probably suffices for text-happy kids; if not, you can always upgrade. Parents who use their own minutes sparingly will save money by putting their student on the family-share plan.

Alternatively, decouple your accounts by having your kid use a prepaid plan. That strategy protects you from youthful excess and teaches your student how to budget, says Joseph Pawlikowski of goingcellular.com, which reviews cell phones and service plans. "Once the minutes run out, they're gone." Virgin Mobile offers a pay-as-you-go plan that provides 1,000 minutes for $50; for another $20 a month, you can get unlimited texting.

Pity the kids who have to take calls outside in the cold because their dorm room is the dreaded dead zone. Before locking into any plan, have your student scout out which network gets the best coverage on campus. And don't forget to see that his or her cell phone has your area code. Otherwise, you'll rack up long-distance charges every time you call your frosh on your landline.

Your student may insist that everyone has a smart phone, but phones with fewer features can perform wonders on an as-needed basis. Verizon's GPS-enabled phones, for instance, let your student download the VZ-Navigator for 24 hours, at $3 a pop-letting you rest easier when he or she takes a road trip.

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